The Best Trading Opportunity Today – December Comex Silver – November 13, 2015

Oversold technical indicators and the potential for a closing price reversal bottom make December Comex Silver futures the market to watch today.

Today’s session begins with silver in a prolonged move down in terms of price and time. The market is down 12 sessions from the recent top on October 28. This puts it in the window of time for a potentially bullish closing price reversal bottom. It also puts the market in a position to breakout over a steep downtrending angle that has been guiding it lower since the top at $16.37.

Although we can identify the type of pattern we are looking for and the trigger point for an upside breakout, we still need a catalyst to ignite the move. The catalyst may be today’s U.S. retail sales report. Retail sales have been one of the most volatile reports this year so we could get a miss to the downside which should fuel a strong short-covering rally.

The U.S. retail sales report is important because it will tell the Fed if consumers are helping to strengthen the economy. Month-to-month core retail sales are expected to be up 0.4%. Month-to-month retail sales are expected to show a rise of 0.3%.

Going into the report, traders have placed the odds of a December Fed rate hike at 70%. If the report misses to the downside then these odds may be reduced a little, encouraging short-sellers to lighten up on their positions. This would lead to profit-taking, and perhaps fuel the start of a strong short-covering rally.

Technically, the main trend is down according to the daily swing chart so any buying will be against the trend. Since topping at $16.37 on October 28, silver has produced 11 consecutive lower-highs and lower-closes. Additionally, it has walked down a steep Gann angle moving at a pace of .08 per day. Today this angle comes in at $15.41.

All we are looking for is a change in the pattern to encourage nervous short-sellers to start buying back profitable contracts. A change in the pattern may give these short-sellers the excuse they need to begin exiting their profitable positions. It may even develop into a panic-bay situation since no one likes to give back profits.

Yesterday’s range was $14.465 to $14.155. There was no follow-through to the downside so its pivot remains intact at $14.31. A sustained move over this level will indicate the presence of buyers or the lack of sellers.

If upside momentum picks up then look for a drive into the downtrending angle at $15.41. There may be a technical bounce on the initial test of this angle, but be prepared for a potential breakout to the upside since this price is also a trigger point for an upside breakout.

Taking out yesterday’s high at $14.465 will indicate the buying is getting stronger. This move will also but an end to the streak of consecutive lower-highs. This move may even trigger buy stops that will lead to further upside action.

The daily chart indicates there is plenty of room to the upside but normal volatility tells me these levels are not likely to be reached today. Nonetheless, they are good targets over the near-term should a solid bottom begin to develop. The primary objective is a retracement zone at $15.26 to $15.52.

Watch the price action and order flow at $15.41 today. We expect an upside breakout through this level especially if driven by a bearish retail sales report. We are not looking to pick a bottom, but rather go with an anticipated shift in momentum.